Brent crude futures were down $4.12, or 4.4 percent, at $88.71 a barrel by 12:43 p.m. EDT (1543 GMT), touching their lowest since February 3 and falling below $90 a barrel for the first since February 8. US West Texas Intermediate crude fell by $4.29, or 4.9 percent, to $82.46, reaching its lowest since January 24 as recession fears moved back into the spotlight.
Oil prices briefly climbed on Wednesday
as Russia´s President Vladimir Putin said
his country would stop delivering oil and gas supplies to countries that introduce price caps.
G7 industrialised powers have vowed to move urgently towards implementing a price cap on Russian oil imports to cut off a major source of funding for Moscow´s military action in Ukraine.
But oil prices then turned sharply lower, with Brent crude, the main international contract, passing under $90 per barrel for the first time since February.
OPEC and its allies earlier this week cut production targets for the first time in more than a year in a bid to lift prices.
“While the 100,000 barrel cut wasn´t fundamentally significant, it was clearly intended as a warning not to drive the price lower or face further cuts,” said OANDA trading platform analyst Craig Erlam.
“Unfortunately, it seems traders are in no mood to be told what to do and growth fears are instead dictating the price direction.”
“The spectre of a demand-sapping recession across the Western world is closer to becoming reality as soaring inflation and rising interest rates dent consumption,” said PVM analyst Stephen Brennock.
Credit rating agency Fitch on Tuesday said that the halting of the Nord Stream 1 pipeline has increased the likelihood of a recession in the euro zone.
The European Central Bank is widely expected to raise interest rates sharply when it meets on Thursday. A US Federal Reserve meeting follows on September 21.
Weak economic data from China amid its stringent zero-COVID policy has also added to demand concerns.
The country’s crude oil imports in August fell 9.4 percent from a year earlier, customs data showed on Wednesday.
Meanwhile, Britain’s new prime minister, Liz Truss, on Wednesday said she wanted to see more extraction of oil and gas from the North Sea.
Prices had been supported earlier by a threat from Russian President Vladimir Putin to halt all oil and gas supplies if price caps are imposed on Russia’s energy resources.
The European Union proposed to cap Russian gas only hours later, raising the risk of rationing in some of the world’s richest countries this winter.
Analysts already expect oil supply to be tight in the last quarter of the year.
Weekly U.S. inventory reports from the American Petroleum Institute will be released later on Wednesday, a day later than usual because of a public holiday on Monday.
U.S. crude stockpiles are expected to have fallen for a fourth consecutive week, declining by an estimated 733,000 barrels in the week to September 2, a preliminary Reuters poll showed on Tuesday.